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Dish Backs Off Plan To Drop Weather Channel In Fee Dispute

By Nat Worden Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Satellite TV provider Dish Network Corp. (DISH) backed off its plan to remove The Weather Channel from its system overnight, and its subscribers continued to have access to the network on Friday. The company had announced Thursday that it would remove the channel in a dispute over carriage fees, as The Weather Channel asked for a substantial increase in compensation from the satellite giant. The two sides continued negotiating on Friday, averting a programming disruption, though an agreement on carriage fees has yet to be reached, according to a person familiar with the matter. Dish had said it would replace The Weather Channel with its own weather network, The Weather Cast. It wasn't immediately clear how the latest news affected those plans. Pay-TV providers like Dish are facing increasing demands for per-subscriber fees from cable and broadcast networks as advertising revenue has slumped amid the economic downturn and the rise of digital media. Satellite and cable companies have resisted such demands to avoid losing profit margin or raising prices for their subscribers, and the result has been a series of public stand-offs in the TV industry, with threats of programming blackouts attracting the attention of lawmakers and regulators. Over the past year, Cablevision Systems Inc. (CVC) has endured programming disruptions during bitter carriage-fee disputes with Scripps Networks Interactive Inc. (SNI) and The Walt Disney Co.'s (DIS) ABC Broadcasting. Meanwhile, Time Warner Cable Inc. (TWC) barely avoided a blackout from News Corp.'s (NWS, NWSA) Fox Broadcasting in a year-end standoff that was widely viewed as setting a precedent for the broadcast industry's efforts to garner subscription revenue from distributors. Media research firm SNL Kagan estimates that The Weather Channel, which was acquired in 2008 by a consortium of investors led by General Electric Co.'s (GE) NBC Universal and private equity firms Bain Capital and Blackstone Group L.P. (BX), receives 12 cents per subscriber in compensation from distributors, on average. NBCU, which owns an estimated 25% stake in the cable network, is awaiting the consummation of a landmark deal for the nation's largest cable provider, Comcast Corp. (CMCSA), to take a majority stake in the media conglomerate. Comcast competes for subscribers with Dish. For its part, Dish removed content from its website overnight about its plan to remove The Weather Channel from its system. Dish said it was dropping the The Weather Channel because the network has moved away from its traditional role of weather reporting to a mix of movies and other entertainment-focused programming. It noted that its replacement channel programs 24-hour weather reporting, interactive forecasting and real-time national storm tracking. "Our customers always tell us that the only thing they want in a weather channel is weather reporting," said Dave Shull, senior vice president of programming with Dish, in a statement released Thursday. "We believe The Weather Cast is the best available weather service in America." -By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com (Roger Cheng contributed to this report.)